Globalisation and the Environment

Earth Scars - holes to die for

noreply@blogger.com (Economist) — Fri, 30 Oct 2009 06:34:00 +0000

A picture is worth a thousand words - these are impressively big holes. Is there room for more holes this size elsewhere - sure there is. The earth is a big place.

The scale can only really be appreciated in the shots that include tiny houses and trucks.

10 Most Incredible Earth Scars [Environmental graffiti]

The best commentary:

The size of the hole is such that wind currents inside cause a downdraft that has resulted in helicopters being sucked in and crashing. Good to know the area above it is now a no-fly zone.

CO2 Emissions: Cumulative vs Annual

noreply@blogger.com (Economist) — Mon, 19 Oct 2009 23:33:00 +0000

This is a picture I have wanted to see for a long time but was too lazy to do it myself.

The result is interesting on many levels. The US is very naughty although China is catching up quick.

http://www.flickr.com/photos/carbonquilt/4014194070/sizes/l/in/pool-16135094@N00/

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Does trade openness improve environmental quality?

noreply@blogger.com (Economist) — Sun, 18 Oct 2009 22:25:00 +0000

A perfect "globalisation and the environment" paper that I need to read. Another one on the ever growing list.

The results appear plausible and the methods appropriate.

Does trade openness improve environmental quality?

Shunsuke Managia, Akira Hibikic and Tetsuya Tsurumia

Received 8 February 2008.
Available online 26 June 2009.

Abstract

The literature on trade openness, economic development, and the environment is largely inconclusive about the environmental consequences of trade. This study treats trade and income as endogenous and estimates the overall impact of trade openness on environmental quality using the instrumental variables technique. We find that whether or not trade has a beneficial effect on the environment varies depending on the pollutant and the country. Trade is found to benefit the environment in OECD countries. It has detrimental effects, however, on sulfur dioxide (SO2) and carbon dioxide (CO2) emissions in non-OECD countries, although it does lower biochemical oxygen demand (BOD) emissions in these countries. We also find the impact is large in the long term, after the dynamic adjustment process, although it is small in the short term.

Keywords: Trade openness; Composition effect; Scale effect; Technique effect; Environment; Comparative advantage; Environmental regulations effect

JEL classification codes: F18; O13; L60; L50

Environmental Economics Survey

noreply@blogger.com (Economist) — Sun, 18 Oct 2009 13:55:00 +0000

Apologies - original post edited at request of the survey designers - to be posted again once the results are known.

My thoughts on this survey could potentially bias the results.

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Elinor Ostrom research papers

noreply@blogger.com (Economist) — Sun, 18 Oct 2009 13:45:00 +0000

I am afraid I opted out of all the "Ostrom" fever that has been keeping the blogosphere busy in recent days.

It is sad to admit that the majority of "environmental economists" that I know including experts on the "commons" had little recognition of the name. Of course this is our failing as "mainstream economists" I expect.

To remedy this here is a selection of Ostrom's papers - for FREE. The remarkable thing about these papers is that I have published in some of these journals and it is not just a list of Econometricas and AERs. There is hope for us all.

Elinor Ostrom

* The value-added of laboratory experiments for the study of institutions and common-pool resources
Journal of Economic Behavior and Organization, Volume 61, Issue 2, 2006, Ostrom, E.

* Local enforcement and better forests
World Development, Volume 33, Issue 2, 2005
Gibson, C.C., Williams, J.T., Ostrom, E.

* The contested role of heterogeneity in collective action: Some evidence from community forestry in Nepal
World Development, Volume 29, Issue 5, 2001
Varughese, G., Ostrom, E.

* Dilemma games: Game parameters and matching protocols
Journal of Economic Behavior and Organization, Volume 46, Issue 4, 2001, Schmidt, D., Shupp, R., Walker, J., Ahn, T.K., Ostrom, E.

* The concept of scale and the human dimensions of global change: A survey
Ecological Economics, Volume 32, Issue 2, 2000
Gibson, C.C., Ostrom, E., Ahn, T.K.

MORE FREE OSTROM paper:

HERE.

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Bunny slaughter keeps Swedes warm at night

noreply@blogger.com (Economist) — Fri, 16 Oct 2009 13:56:00 +0000

The news that Swedes are being kept nice and toasty at night due to the wholesale slaughter of thousands and cute and cuddly bunnies is a newspaper (and blog writers) dream.

Bunny boliers of the world unite.

Cue picture of fluffy bunny as used on the BBC website.

Swedes divided over bunny biofuel [BBC]

Residents in Stockholm are divided over reports that rabbits are being used to make biofuel.

The bodies of thousands of rabbits are fuelling a heating plant in central Sweden, local newspapers say.

The city of Stockholm has an annual cull of thousands of rabbits to protect the capital's parks and green spaces.

The rabbits, not native to Sweden, are mainly the offspring of pets released by owners, and are said to be destroying parks in the capital.

Since they have no natural predators, the city administration of Stockholm employs hunters to kill the rabbits.

Tommy Tuvunger, one of the hunters, told Germany's Spiegel website that 6,000 rabbits were culled last year, and another 3,000 this year.

"They are a very big problem," he said. "Once culled, the rabbits are frozen and when we have enough, a contractor comes and takes them away."

The frozen rabbits are then taken to a heating plant in Karlskoga which incinerates them to heat homes.

Bunny boilers

Leo Virta, the Managing Director of Konvex - the plant's suppliers - told the BBC that Konvex has developed a new way of processing animal waste with funding from the EU as part of the Biomal project.

He says that with this new method, raw animal material is crushed, ground and then pumped to a boiler where it is burned together with wood chips, peat or waste to produce renewable heat.

"It is a good system as it solves the problem of dealing with animal waste and it provides heat," said Mr Virta.

Reaction in Sweden has been divided, said James Savage, managing editor of The Local - an online news service covering Sweden.

"In the town where they are burning them the reaction of the residents is quite relaxed," Mr Savage told the BBC World Service. "But in Stockholm there's the big city attitude of the rabbits being cute.

"That's amongst some people, particularly among some animal rights activists who think this is not a good way to treat rabbits."

Environmental crises: past, present, and future

noreply@blogger.com (Economist) — Fri, 09 Oct 2009 16:11:00 +0000

Scott Taylor gave this paper at the 2009 European Association of Environmental Economists conference in Amsterdam this year. It was an excellent talk and is a great paper.

I buy the story and the model. The increase in CO2 can be viewed as a crisis in the making. This paper is a ripping yarn of death, doom and destruction. Recommend to all (with a maths and squiggly pictures warning).

Innis Lecture: Environmental crises: past, present, and future

M. Scott Taylor

Department of Economics, University of Calgary

ABSTRACT

Abstract . Environmental crises are distinguished by rapid and largely unexpected changes in environmental quality that are difficult if not impossible to reverse. Examples would be major extinctions and significant degradations of an ecosystem. I argue there are three preconditions for crisis: failures in governance, an ecological system exhibiting a tipping point, and an economy/environment interaction with positive feedbacks. I develop a simple model to illustrate how a crisis may arise, and draw on our knowledge of past and present crises to highlight the mechanisms involved. I then speculate as to whether climate change is indeed a crisis in the making.

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The weight of wee and why it matters

noreply@blogger.com (Economist) — Tue, 06 Oct 2009 21:39:00 +0000

I am a little surprised this has not been thought of before. If an airline could extract the urine out of all passengers before they embark it could come pretty close to saving the planet.

Just think of the benefit if all human waste products could be removed prior to flying.

I shall endeavor to do my best before each flight which will significantly lower the guilt that I usually feel when flying.

Pee before you fly policy of Japanese airline [Metro]

Japanese airline ANA is introducing a policy that some think really takes the pee. They want passengers to relieve themselves before they board the aircraft, in a somewhat desperate attempt to reduce carbon emissions.

The airline's chiefs say that empty bladders means passengers will weigh less, so their fleet of aircraft will save fuel and reduce their carbon emissions.

All Nippon Airways reckons that the policy could lead to a five-tonne reduction in carbon emissions per month, as well as saving the company money.

The new regulation will be policed by 'loo monitors', who stand by boarding gates and take waiting passengers to the lavatories before they embark.

Japan's NHK television says that the loo rule, which began on October 1, is a four-week experiment that ANA may well poo-poo in the end.

It may sound plane crazy, but ANA should at least be given some credit for trying. After all, flying is the fastest-growing source of carbon dioxide emissions, accounting for more than 600 million tons of the greenhouse gas per year.

Polls show global warming nothing to be scared of.

noreply@blogger.com (Economist) — Mon, 05 Oct 2009 09:05:00 +0000

Polls, polls and more polls.

In the poll results below I suppose it depends on what people perceive as "scare worthy". Whilst man made global warming is most probably occurring as I write I am not personally "scared". I might be if I lived on the coast of Bangladesh though.

Lawrence Solomon: The end is near [National Post]

I know that the global warming scare is over but for the shouting because that’s what the polls show, at least those in the U.S., where unlike Canada the public is polled extensively on global warming. Most Americans don’t blame humans for climate change — they consider global warming to be a natural phenomenon. Even when the polls showed the public believed man was responsible for global warming, the public didn’t take the scare seriously. When asked to rank global warming’s importance compared to numerous other concerns — unemployment, trade, health care, poverty, crime, and education among them — global warming came in dead last. Fewer than 1% chose global warming as scare-worthy.

At least "Business" is taking it seriously. The quote below links to a previous post - now carbon subsidies are out there everyone is trying to profit maximize by gaming the system. Entirely rational.

None of this matters anymore, I recently heard at the Global Business Forum in Banff, where a fellow panelist from the Pew Centre on Global Climate Change told the audience that, while she couldn’t dispute the claims I had made about the science being dubious, the rights and wrongs in the global warming debate are no longer relevant. “The train has left the station,” she cheerily told the business audience, meaning that the debate is over, global warming regulations are coming in, and everyone in the room — primarily business movers and shakers from Western Canada — had better learn to adapt.

Her advice was well accepted, chiefly because most in the room had already adapted — they are busy trying to cash in by obtaining carbon subsidies, building nuclear plants, or providing services to the new carbon economy.

Should Europes poor help the rich to help the poor?

noreply@blogger.com (Economist) — Mon, 05 Oct 2009 08:58:00 +0000

Poland have a good point. When the EU promise such massive transfers of wealth from the EU to the developing world to mitigate climate change where exactly does the money come from? For sure some of it comes from the poor countries of Europe such as Poland.

There is a long long way to go - the chances of success at Copenhagen are increasingly slim. The differences between and within regions are just too large.

Economists are pessimistic in nature but it is increasingly difficult to see the light at the end of this particular tunnel.

Poland refuses to pay poorer nations' climate tab [EU Business]

(BRUSSELS) - Poland on Friday put a giant spoke in European negotiations on financing the fight to tame global warming when it refused to stump up for richer, western partners.

"Quite frankly, from our point of view it's totally unacceptable that the poor countries of Europe should help the rich countries of Europe to help the poor countries in the rest of the world," said Polish Finance Minister Jan Rostowski.

"We will not agree to a mechanism which would lead to such a completely unjust proposal," he added.

European Union finance ministers are meeting in Gothenburg seeking to agree on who pays how much into a pot aimed at convincing newly industrialised countries to sign up to a post-2012 global pact.

The European Commission estimates that five billion to seven billion euros annually will be needed in the 2010-2012 period until long-term "financial architecture" is put in place, hopefully, at a UN climate conference in Copenhagen in December.

Brussels says the annual figure needed to help developing nations combat and deal with climate change will hit 100 billion euros (147 billion dollars) per year by 2020.

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Disagreements have also emerged among EU member states on Franco-German ideas for a carbon tax on imports from regions with poor environmental standards.

SOS climate

noreply@blogger.com (Economist) — Mon, 05 Oct 2009 08:34:00 +0000

From the inbox: The scientists are getting rather hot under the collar.

I like this anti-cap and trade quote:

Cap and trade is the worst choice for pricing carbon. It is proven ineffective even in its best incarnations, is influence-prone, creates a huge, risky, game-able carbon market that is extremely complex, subject to manipulations, whose likely bubble-bust will overshadow the mortgage or the dot com bubble.

I would like to intelligently counter these criticisms of cap and trade but I fear that there is more than an element of truth in this quote. What the alternative should be is a subject for another cut and paste post ;-)

Here is the press release with the good bits in bold.

Climate SOS: Senate Bill "Condemns us to Climate Chaos"

Climate SOS, a coalition of scientists and activists who support science- and environmental justice-based climate legislation, today characterized the draft Senate bill, called the “Clean Energy Jobs and American Power Act” which was introduced on Wednesday by Senators John Kerry (D-Mass.) and Barbara Boxer (D-Calif.) as an “irresponsible non-solution.”

They maintain that any bill that embraces cap and trade, offsets, outrageously inadequate emission reduction targets, and counter-solutions such as biomass burning, nuclear power and more coal fired power plants (under the guise of partial carbon capture technology that is as yet unavailable) will fail to meet its stated goal of forestalling catastrophic climate change.

Friends of the Earth, Greenpeace, the Citizens Climate Lobby, Center for Biological Diversity and others have also rejected the Senate bill for its lack of grounding in science and its failure to consider global environmental justice concerns.

Maggie Zhou, a Climate SOS organizer, and project coordinator with the Massachusetts Coalition for Healthy Communities, said “Cap and trade is the worst choice for pricing carbon. It is proven ineffective even in its best incarnations, is influence-prone, creates a huge, risky, game-able carbon market that is extremely complex, subject to manipulations, whose likely bubble-bust will overshadow the mortgage or the dot com bubble. While cap and trade is the scheme of choice for polluters and Wall Street executives, a revenue-neutral carbon tax-and-dividend program would be much more straightforward, equitable, less prone to fraud and gaming, and would compensate people, not corporations, for the costs of pricing carbon.” She added “The US forced cap and trade into the Kyoto protocol, which we didn’t even ratify. It’s time to correct that mistake, and lead the world in implementing a much more sensible system that could simplify global efforts on fighting climate change, that has a real chance of success.”

"It is no consolation that the Senate sets superficially more ambitious goals for emission reductions than the House," said BiofuelWatch co-director and Climate SOS spokesperson Rachel Smolker. "While the House bill required landfill gas to be captured, the Senate bill allows those projects to be used as offsets to allow additional emissions from smokestacks. This slight of hand allows politicians to claim ‘stronger targets’ when in fact it’s all number-smithing. Dire predictions from climate scientists make it clear that even if all the offset provisions are stripped away, the stated targets in both the Senate and the House bills (which are at most a few percentage point cuts below 1990 emissions by 2020) are still pathetically trivial, unable to even approach a greenhouse gas stabilization at 450 parts-per-million (ppm), while it is becoming clear that the safe level is no more than 350 ppm, way below what’s already in the air today (387 ppm). In introducing an ineffective legislation, the senators send a poor message to Copenhagen and condemn us to climate chaos."

The Senate bill is modeled upon the American Clean Energy and Security Act (ACESA), passed by the House of Representatives late June. In the past month, members of climate SOS, lead by Duff Badgley, founder of One Earth Climate Action Group, met with senate staffers in North Dakota, Indiana, Ohio, and Arkansas in an effort to rally opposition to the false climate bill on environmental grounds. "Voting against such a poor bill would in fact be the environmentally responsible choice”, said Badgley. Last week, the coalition also joined forces with activists from Rising Tide North America and many climate justice groups in actions from east to west coast, exposing the polluter-protection nature of the “landmark climate legislation”. Their voices were heard inside and outside the police blockade of the UN climate summit in NYC, at the Danish environment minister’s lecture that urged US to pass this false climate bill, and outside offices of big corporate green groups such as NRDC, Environmental Defense, and Nature Conservancy.

On Spatial Heterogeneity in Environmental Compliance Costs

noreply@blogger.com (Economist) — Thu, 01 Oct 2009 08:56:00 +0000

A must read paper. All of Randy Becker's papers are excellent and show off the quality of data in the US.

I have been trying to look at this issue using other country data but any paper is always going to be of a lower quality due to data issues (and natural talent issues).

On Spatial Heterogeneity in Environmental Compliance Costs

Date: 2009-09

By: Randy Becker

URL: http://d.repec.org/n?u=RePEc:cen:wpaper:09-25&r=env

This paper examines the extent of variation in regulatory stringency below the state level, using establishment-level data from the U.S. Census Bureau’s Pollution Abatement Costs and Expenditures (PACE) survey to estimate a county-level index of environmental compliance costs (ECC). County-level variation is found to explain 11-18 times more of the variation in ECC than state-level variation alone, and the range of ECC within a state is often large. At least 34% of U.S. counties have ECC that are statistically different from their states’. Results suggest that important spatial variation is lost in state-level studies of environmental regulation.

Keywords: environmental costs, regulation, manufacturing, U.S. counties
JEL: Q52

The Pollution Game for the Classroom

noreply@blogger.com (Economist) — Thu, 01 Oct 2009 08:48:00 +0000

An excellent resource for teaching (and students in environmental economics). I would certainly use this if I was still teaching env-econ (a victim of my increased management role).

The Pollution Game: A Classroom Exercise Demonstrating the Relative Effectiveness of
Emissions Taxes and Tradable Permits [PDF]

By Jay R. Corrigan

ABSTRACT

This classroom exercise illustrates the strengths and weaknesses of various regulatory frameworks aimed at internalizing negative externalities from pollution. Specifically, the exercise divides students into three groups—the government regulatory agency and two polluting firms—and allows them to work through a system of uniform command-and-control regulation, a tradable emissions permit framework, and an emissions tax. Students have the opportunity to observe how flexible, market-oriented regulatory frameworks can outperform inflexible command-and-control. More importantly given the ongoing debate about how best to regulate carbon dioxide emissions, students can also observe how the introduction of abatement-cost
uncertainty can cause one market-oriented solution to outperform another.

Keywords: classroom experiments, emissions taxes, pollution, tradable emissions permits.

Co2 pollution is good!!

noreply@blogger.com (Economist) — Wed, 30 Sep 2009 08:17:00 +0000

When one watches the following advert paid by the coal industry it is hard to know whether to laugh or cry.

Only in America.

For more information read this link from Care2.

Relax, CO2 is Good for You!

The Washington Post reports that long-time oil industry executive H. Leighton Steward has teamed with Corbin J. Robertson Jr., chief executive of and leading shareholder in Natural Resource Partners, a Houston-based owner of coal resources, to get out the message that higher CO2 levels will actually help the Earth's ecosystems. They have invested $1 million into two new organizations, one to lobby, one to educate the public. How lucky we are that these fearless oil and coal industry executives are leading this charge for truth.

Potato Economics

noreply@blogger.com (Economist) — Wed, 30 Sep 2009 07:24:00 +0000

Always on the look out for new branches of economics come an unmissable paper from Nathan Nunn and Nabcy Qian from British Columbia and Yale respectively.

The abstract reveals the enormous impact of the Solanum tuberosum on world population growth and unbanisation. This is a great "globalisation" is good story. Without the marauding Europeans in the Americas and Columbus (1492) bringing the spud back to Spain, Europe would still be a agricultural backwater.

The Potato's Contribution to Population and Urbanization: Evidence from an Historical Experiment

Nathan Nunn
University of British Columbia - Department of Economics

Nancy Qian
Yale University - Department of Economics

July 2009

CEPR Discussion Paper No. DP7364

Abstract:
We exploit regional variation in suitability for cultivating potatoes, together with time variation arising from their introduction to the Old World from the Americas, to estimate the impact of potatoes on Old World population and urbanization. Our results show that the introduction of the potato was responsible for a significant portion of the increase in population and urbanization observed during the 18th and 19th centuries.

Keywords: agriculture, Columbian Exchange, Demography, Economic Development, Industrialization, potato

JEL Classifications: J1, N1, N5, O14
Working Paper Series

Environmental class war - burn the rich

noreply@blogger.com (Economist) — Tue, 29 Sep 2009 19:50:00 +0000

George Monbiot writes great columns in the Guardian. Sure, pollution growth is never going to be good for the environment. What is far worse for the environment is the number of rich people.

The parts in "bold" are sheer classic Monbiot. A great thought provoking article.

Class war anyone?

While there's a weak correlation between global warming and population growth, there's a strong correlation between global warming and wealth

Here is the link to an article worth reading in full.

Stop blaming the poor. It's the wally yachters who are burning the planet [Guardian]

It's no coincidence that most of those who are obsessed with population growth are post-reproductive wealthy white men: it's about the only environmental issue for which they can't be blamed. The brilliant Earth systems scientist James Lovelock, for instance, claimed last month that "those who fail to see that population growth and climate change are two sides of the same coin are either ignorant or hiding from the truth. These two huge environmental problems are inseparable and to discuss one while ignoring the other is irrational." But it's Lovelock who is being ignorant and irrational.

A paper published yesterday in the journal Environment and Urbanization shows that the places where population has been growing fastest are those in which carbon dioxide has been growing most slowly, and vice versa. Between 1980 and 2005, for instance, sub-Saharan Africa produced 18.5% of the world's population growth and just 2.4% of the growth in CO2. North America turned out only 4% of the extra people, but 14% of the extra emissions. Sixty-three percent of the world's population growth happened in places with very low emissions.

Even this does not capture it. The paper points out that about one sixth of the world's population is so poor that it produces no significant emissions at all. This is also the group whose growth rate is likely to be highest. Households in India earning less than 3,000 rupees (£40) a month use a fifth of the electricity per head and one seventh of the transport fuel of households earning 30,000 rupees or more. Street sleepers use almost nothing. Those who live by processing waste (a large part of the urban underclass) often save more greenhouse gases than they produce.

Many of the emissions for which poorer countries are blamed should in fairness belong to the developed nations. Gas flaring by companies exporting oil from Nigeria, for instance, has produced more greenhouse gases than all other sources in sub-Saharan Africa put together. Even deforestation in poor countries is driven mostly by commercial operations delivering timber, meat and animal feed to rich consumers. The rural poor do far less harm.

The paper's author, David Satterthwaite, points out that the old formula taught to students of development – that total impact equals population times affluence times technology (I = PAT) – is wrong. Total impact should be measured as I = CAT: consumers times affluence times technology. Many of the world's people use so little that they wouldn't figure in this equation. They are the ones who have most children.

While there's a weak correlation between global warming and population growth, there's a strong correlation between global warming and wealth. I've been taking a look at a few super-yachts, as I'll need somewhere to entertain Labour ministers in the style to which they are accustomed. First I went through the plans for Royal Falcon Fleet's RFF135, but when I discovered that it burns only 750 litres of fuel per hour I realised that it wasn't going to impress Lord Mandelson. I might raise half an eyebrow in Brighton with the Overmarine Mangusta 105, which sucks up 850 litres per hour. But the raft that's really caught my eye is made by Wally Yachts in Monaco. The WallyPower 118 (which gives total wallies a sensation of power) consumes 3,400 litres per hour when travelling at 60 knots. That's nearly a litre per second. Another way of putting it is 31 litres per kilometre.

Of course, to make a real splash I'll have to shell out on teak and mahogany fittings, carry a few jetskis and a mini-submarine, ferry my guests to the marina by private plane and helicopter, offer them bluefin tuna sushi and beluga caviar, and drive the beast so fast that I mash up half the marine life of the Mediterranean. As the owner of one of these yachts I'll do more damage to the biosphere in 10 minutes than most Africans inflict in a lifetime. Now we're burning, baby.

Someone I know who hangs out with the very rich tells me that in the banker belt of the lower Thames valley there are people who heat their outdoor swimming pools to bath temperature, all round the year. They like to lie in the pool on winter nights, looking up at the stars. The fuel costs them £3,000 a month. One hundred thousand people living like these bankers would knacker our life support systems faster than 10 billion people living like the African peasantry. But at least the super wealthy have the good manners not to breed very much, so the rich old men who bang on about human reproduction leave them alone.

In May the Sunday Times carried an article headlined "Billionaire club in bid to curb overpopulation". It revealed that "some of America's leading billionaires have met secretly" to decide which good cause they should support. "A consensus emerged that they would back a strategy in which population growth would be tackled as a potentially disastrous environmental, social and industrial threat." The ultra-rich, in other words, have decided that it's the very poor who are trashing the planet. You grope for a metaphor, but it's impossible to satirise.

James Lovelock, like Sir David Attenborough and Jonathan Porritt, is a patron of the Optimum Population Trust. It is one of dozens of campaigns and charities whose sole purpose is to discourage people from breeding in the name of saving the biosphere. But I haven't been able to find any campaign whose sole purpose is to address the impacts of the very rich.

The obsessives could argue that the people breeding rapidly today might one day become richer. But as the super wealthy grab an ever greater share and resources begin to run dry, this, for most of the very poor, is a diminishing prospect. There are strong social reasons for helping people to manage their reproduction, but weak environmental reasons – except among wealthier populations.

The Optimum Population Trust glosses over the fact that the world is going through demographic transition: population growth rates are slowing down almost everywhere and the number of people is likely, according to a paper in Nature, to peak this century, probably at about 10 billion. Most of the growth will take place among those who consume almost nothing.

But no one anticipates a consumption transition. People breed less as they become richer, but they don't consume less – they consume more. As the habits of the super-rich show, there are no limits to human extravagance. Consumption can be expected to rise with economic growth until the biosphere hits the buffers. Anyone who understands this and still considers that population, not consumption, is the big issue is, in Lovelock's words, "hiding from the truth". It is the worst kind of paternalism, blaming the poor for the excesses of the rich.

So where are the movements protesting about the stinking rich destroying our living systems? Where is the direct action against super-yachts and private jets? Where's Class War when you need it?

It's time we had the guts to name the problem. It's not sex; it's money. It's not the poor; it's the rich.

Is the ETS economic suicide for Europe? The NYT investigates

noreply@blogger.com (Economist) — Tue, 29 Sep 2009 12:44:00 +0000

Europe leads the world in terms of environmental regulation via the European Trading Scheme (ETS).

Has the cost to competitiveness really been worth it given the increase in emissions from China, India and the US? Surely something is better than nothing but what about those who have lost their jobs because of the ETS (but what about all those nice new shiny green jobs?).

An expansion of the ETS across the globe would be great but politically next to impossible.

E.U. Alone and Lonely on Carbon [New York Times]

BRUSSELS — Carbon trading put the European Union in the environmental vanguard.

Since 2005, the trade bloc has operated the world’s only continentwide system that puts a cap on greenhouse gas emissions and that requires major polluters to hold tradable allowances.

But the system has also been the most “costly climate policy program in the world,” according to Jürgen R. Thumann, the president of BusinessEurope, a powerful confederation of industry and employer groups.

Mr. Thumann said European business leaders are desperate to expand the system to the United States and eventually across the globe to reduce the “dangers to our ability to compete internationally.”

But with talks on a new global climate treaty seemingly at a stalemate, and with climate legislation delayed in major polluting countries like the United States and Australia, those prospects look increasingly distant.

Meanwhile the E.U. shows no sign of abandoning the system, leaving business leaders like Mr. Thumann with little choice but to speak out at home and to press developed nations abroad to match Europe’s efforts when they gather at the U.N. summit meeting on climate change in December in Copenhagen.

Carbon trading was supposed to be the least costly way for Europe to cut emissions. The idea is that industries buy allowances to emit greenhouse gases if they exceed a certain quota or sell them if they have too many.

But Europe’s relationship with carbon trading goes much deeper than economics, and “is now rooted in the bloc’s aspirations to global leadership,” said Bernice Lee, an expert in energy and environment at Chatham House, a research institution in London.

After the United States declined to ratify the Kyoto Protocol in 2001, Europeans swung their weight behind the treaty, which was the first major attempt to limit emissions globally. As part of those efforts, Europe supported a bid by Russia to join the World Trade Organization.

Vladimir Putin, as Russian president, reciprocated by supporting Kyoto. The treaty required ratification by countries producing at least 55 percent of the world’s greenhouse gases and support from Russia, with its large share of emissions, allowed the treaty to take effect.

More recently, the E.U. authorities have identified carbon trading as a way of raising huge sums of money demanded by developing nations as part of any new global climate treaty.

Ms. Lee of Chatham House said there was “a strong and growing appreciation by E.U. governments” that the revenues generated from selling pollution allowances could help them to balance their own budgets, as well as fund climate-related initiatives.

Even as European nations deepen their reliance on carbon trading, governments elsewhere still are struggling to put such systems in place.

In the United States, legislation to set up carbon trading is stuck in the Senate, which probably will not act until next year. In Australia, the government could call an election on the issue if the legislation fails to pass on its second attempt in November.

In Japan, a new government wants to introduce carbon trading but faces stiff resistance from industry as the country emerges from its deepest postwar recession.

Another factor that continues to muddy the prospects for carbon trading are reports of abuse and manipulation.

In August, it emerged that British customs officials had arrested seven people near London for dodging a value added tax, which should have been paid for selling large amounts of allowances.

In a bid to stop similar cases in the future, Britain, France and the Netherlands have exempted carbon trading from the levy.

Last week, an E.U. court ruled that Poland and Estonia could challenge the European Commission’s assessment of how many allowances their industries were entitled to. That stoked fears among traders that those governments would take advantage of the ruling to issue larger numbers of allowances to favored industries than was originally permitted.

E.U. officials sought to quash speculation about the long-term stability of the carbon markets by saying governments would no longer have the same right to intervene after 2012. But prices of allowances still fell sharply on carbon markets.

Perhaps the thorniest problem for E.U. environment officials is how to make the system more palatable for business without entirely neutering its chances of cutting emissions.

Stavros Dimas, the E.U. environment commissioner, pushed forward this month with plans to continue giving large amounts of allowances away free to industry sectors most exposed to international competition.

The French president, Nicolas Sarkozy, said this month that he and Angela Merkel, the German chancellor, were proceeding with plans for a “border adjustment tax” on imports from countries without targets and trading systems comparable to those in Europe.

Mr. Sarkozy’s approach is sure to stoke tensions with some of the Continent’s major trading partners. Such taxes could start even start a protectionist backlash – a prospect that compounds Mr. Thumann’s concerns about the effects of carbon trading on European competitiveness.

“Climate protection is one of the saddest examples of a failure by leading nations to coordinate responses,” said Mr. Thumann of BusinessEurope. “We’ve got to have closer international cooperation to reduce emissions cost-effectively,” he said.

Carbon Capture and Storage - next steps: finance, demonstration and feasibility

noreply@blogger.com (Economist) — Tue, 29 Sep 2009 12:31:00 +0000

London based seminar for all those interested in Carbon Capture (from the inbox).

Westminster Energy, Environment & Transport Forum Keynote Seminar

Carbon Capture and Storage - next steps:
finance, demonstration and feasibility

with
Martin Deutz
Director of the Cleaner Fossil Fuels Unit
Department of Energy and Climate Change

and

Tony Grayling
Head of Environmental Policy
Environment Agency

Morning, 23rd October 2009
The Royal Society, 6-9 Carlton House Terrace, London SW1Y 5AG

This seminar is supported by Scottish Power

Seminar

This seminar will focus on the implications of the recent announcement from the Department of Energy and Climate Change on latest plans for the demonstration and deployment of CCS, and examine the outstanding practical issues. We are delighted that Martin Deutz, Director of the Cleaner Fossil Fuels Unit, Department of Energy and Climate Change; and Tony Grayling, Head of Environmental Policy, Environment Agency, have agreed to take part.

Other confirmed speakers include: Dr Jeff Chapman, Chief Executive, The Carbon Capture & Storage Association; Dr Pierre Dechamps, Adviser - Energy and Climate Change, European Commission; Sean Furey, Deputy Director, Protect Kent - The Kent Branch of CPRE; Simon Giles, Lead, Smart Technology Strategy, Accenture; Munir Hassan, Partner, CMS Cameron McKenna; Professor Stuart Haszeldine, Professor of Geology/co-leader, University of Edinburgh/UK Carbon Capture and Storage Consortium; David Hone, Group Climate Change Adviser, Shell; and Chris Littlecott, Senior Policy Advisor, Green Alliance. We are in touch with Ofgem, who have offered, in principle, to speak - and we are just sorting out details.

Supported by Scottish Power, this seminar is organised impartially and independently by the Westminster Energy, Environment & Transport Forum.

Sessions will look at key challenges for implementation, including:
• Current thinking on the key factors - technical, economic and practical - determining the feasibility of Carbon Capture and Storage;
• The Environment Agency’s proposed role as independent assessor of the financial and technical viability of CCS;
• Latest plans for the demonstration competition;
• First indications from trials in Germany - and emerging ‘numbyism’ public opinion barriers;
• Investment incentives, the role of the EU ETS and the potential impact on energy prices; and
• The likely effect of an emissions performance standard and options for a ‘safety net’ should the technology take longer than expected to prove.

Other themes in this complex set of issues will also be up for discussion. I have copied the current draft agenda below my signature, to give you a feel for the morning. You can follow the updated, live agenda here, at our website. This meeting is organised on the basis of strict impartiality by the Westminster Energy, Environment & Transport Forum.

Cap and Trade - Krugman style

noreply@blogger.com (Economist) — Tue, 29 Sep 2009 12:20:00 +0000

Paul Krugman writes on "cap n trade" in the NY Time.

The textbook economics of cap-and-trade [NY Times]

I realized, after the last post, that it might be useful to write down just what the Econ 101 version of cap and trade looks like; as it happens, this also helps explain the intellectual sins of Glenn Beck and Martin Feldstein.

I am currently writing a paper with someone who is also the co-author of two of Krugman's ex-PhD students (from many years ago). Does that count for anything?

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Google and the Climate Simulator

noreply@blogger.com (Economist) — Sat, 26 Sep 2009 20:46:00 +0000

Google have launched a new climate simulator. This could be a great tool.

Google Earth launches climate simulator [Guardian]

In collaboration with the Danish government and others, we are launching a series of Google Earth layers and tours to allow you to explore the potential impacts of climate change on our planet and the solutions for managing it. Working with data from the Intergovernmental Panel on Climate Change (IPCC), we show on Google Earth the range of expected temperature and precipitation changes under different global emissions scenarios that could occur throughout the century.

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EU emissions trading - the wrangling continues

noreply@blogger.com (Economist) — Fri, 25 Sep 2009 10:03:00 +0000

My environmental economics students will soon be getting to grips with the European Trading Scheme (ETS) as part of their course.

It is useful therefore to point out the continued political wrangling behind the ETS and how it never appears to get any easier.

Te environment invariably loses with every "wrangle".

Europe wrangles over carbon emissions quotas [Reuters]

BRUSSELS (Reuters) - France, Italy and several other European Union countries weighed their chances of haggling up their EU carbon emissions quotas on Thursday, one day after Poland and Estonia successfully challenged theirs in court.

The two east European countries won their appeal on Wednesday for more generous caps on industrial emissions in the Emissions Trading Scheme (ETS), the EU's main tool for ratcheting down gases blamed for climate change.

The ruling by the European Court of First Instance, the bloc's second highest court, threw European carbon markets into uncertainty and the International Emissions Trading Association (IETA) asked countries to refrain from challenging their own quotas.

European carbon markets closed 4 percent lower, leading to a two-day fall of nearly 9 percent.

"We call on all member states to hold back from attempting to make use of a loophole that simply has to be closed for the carbon market, and European climate policy, to continue on a sound footing," IETA said in a statement.

Poland was cautious about its victory on Thursday, weighing the possibility that any re-negotiated quota might be based on emissions data from 2008, a year when industry's emissions fell as it slowed down because of the economic crisis.

European Environment Commissioner Stavros Dimas confirmed that would result in little change to the cap. "It would appear unlikely that there would be any material difference concerning the total number of allowances," he said in a statement.

Elsewhere there was little sign of restraint, with Italy complaining about its quotas and Lithuania and the Czech Republic optimistic about their own pending court appeals.

European Commission spokeswoman Barbara Helfferich played down the chances of renegotiation.

"There is no way of increasing the allowances," she told Reuters. "The ceilings have been established already."

CARBON COSTS

Lithuania and the Czech Republic, which are pursuing a similar appeal to Poland, were encouraged by Wednesday's court decision.

"We will need more carbon emissions due to shutting down Ignalina nuclear power plant at the end of this year, and switching electricity generation to fossil power plants," Stasile Znutiene, at Lithuania's environment ministry, told Reuters.

Italian Prime Minister Silvio Berlusconi had already written last week to the European Commission pointing out the country's difficulties with meeting carbon quotas, an Italian government spokesman said.

Italy did not ask to renegotiate the quota, but asked for "intervention to reach a shared solution," said Paolo Bonaiuti.

A shortage of carbon permits could cost Italy about 500 million euros ($736 million) in the short term, mounting to a total of 800 million by 2012, said another Italian government official.

Several European Union countries, including France, are also discussing the possibility of increasing carbon emissions permits in a reserve fund for new businesses entering the ETS, an EU diplomat said.

"The question of the reserve for new entrants is being asked in several EU countries, among them France, but at this point there is no formal demand of reviewing the allocation plan," the EU diplomat said.

"Volatility and the Natural Resource Curse"

noreply@blogger.com (Economist) — Thu, 24 Sep 2009 08:08:00 +0000

The natural resource curse gets of a lot of headlines. Rick ven der Ploeg is also doing a lot of interesting work in this area.

This recent OEP article demonstrates the importance of volatility.

"Volatility and the Natural Resource Curse"

Oxford Economic Papers, Vol. 61, Issue 4, pp. 727-760, 2009

RICK VAN DER PLOEG, University of Oxford

STEVEN POELHEKKE, European University Institute - Economics Department (ECO)

We provide cross-country evidence that rejects the traditional interpretation of the natural resource curse. First, growth depends negatively on volatility of unanticipated output growth independent of initial income, investment, human capital, trade openness, natural resource dependence, and population growth. Second, the direct positive effect of resources on growth is swamped by the indirect negative effect through volatility. Third, with well developed financial sectors, the resource curse is less pronounced. Fourth, landlocked countries with ethnic tensions have higher volatility and lower growth. Fifth, restrictions on the current account raise volatility and depress growth whereas capital account restrictions lower volatility and boost growth. Our key message is thus that volatility is a quintessential feature of the resource curse.

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Who Pays a Price on Carbon?

noreply@blogger.com (Economist) — Thu, 24 Sep 2009 08:04:00 +0000

Given the proposed US legislation the following paper is a timely piece of research.

The distributional effects of a carbon tax are worthy of further research.

Who Pays a Price on Carbon?

Corbett A. Grainger
University of California, Santa Barbara - Department of Economics

Charles D. Kolstad
University of California, Santa Barbara - Department of Economics

August 2009

NBER Working Paper No. w15239

Abstract:
We use the 2003 Consumer Expenditure Survey and emissions estimates from an input-output model to estimate the incidence of a price on carbon induced by a cap-and-trade program or carbon tax in the US context. We present results on how much difference income deciles pay for a carbon tax as well as which industries see the largest increase in costs due to a carbon tax. We illustrate the main determinant of the regressivity: consumption patterns for energy-intensive goods. We find that a policy targeting CO2 from energy consumption is more regressive than a price on all emissions. Furthermore, on a per-capita basis a carbon price is much more regressive than calculations at the household level. We discuss policy options to offset the adverse distributional effects of a carbon emissions policy.

JEL Classifications: H22, Q43, Q5, Q52, Q53, Q54, Q58

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Glaciers thinning, water levels rising

noreply@blogger.com (Economist) — Wed, 23 Sep 2009 19:55:00 +0000

Shoddy post frequency I know but I promise to improve over the next month.

Let us get back to action with some good old glacier work. I will catch up on all the pre-Copenhagen news soon.

What is interesting here is that it is the speed of the glaciers that is causing the problem. This can only get worse.

Thinning glaciers driving polar ice loss, satellite survey finds [Guardian]

A comprehensive satellite survey of the Greenland and Antarctic ice sheets has revealed an extensive network of rapidly thinning glaciers that is driving ice loss in the regions.

The most profound loss of ice was seen along the continental coastlines, where glaciers speed up as they slip into the sea. In some regions, glaciers flowing into surrounding waters were thinning by nearly 10m a year.

Scientists used data from Nasa's ICESat (Ice, Cloud and and land Elevation Satellite) to piece together a picture of the changing fortunes of glaciers on the ice sheets. The satellite bounces laser light off the ground, allowing researchers to measure the terrain with extraordinary precision.

The survey, compiled from 50m satellite measurements taken between February 2003 and November 2007, shows glaciers thinning at all latitudes in Greenland and along key Antarctic coastlines. Thinning penetrated deep into the interior of the ice sheets and continues to spread as ice shelves melt into the sea.

"We were surprised to see such a strong pattern of thinning glaciers across such large areas of coastline. It's widespread and in some cases, thinning extends hundreds of kilometres inland," said Hamish Pritchard who led the study at the British Antarctic Survey.

In Greenland, glaciers in the south-east were found to be flowing at speeds of more than 100m per year, during which they thinned by 84cm. More slow-going glaciers lost around 12cm a year.

In a vast region of western Antarctica that drains into the Amundsen Sea, the Pine Island glacier and neighbouring Smith and Thwaites glaciers are thinning by 9m a year, the satellite measurements show. The study is published in the journal Nature.

Previous satellite surveys of polar regions have relied upon radar measurements that cannot map the Earth's surface with the same precision as the ICESat laser rangefinder. The satellite allows scientists to take 65m-wide snapshots of the ground, giving an unprecedented view of glaciers on the steep terrain where ice meets ocean.

This satellite survey helps scientists explore how different aspects of climate change are driving ice loss in polar regions. Higher air temperatures can increase surface melting, but warm ocean currents accelerate ice loss more when glaciers flow into the sea.

"The majority of the thinning we see is not due to increased melting from higher atmospheric temperatures, but because the glaciers are flowing faster thanks to their interaction with the oceans," said Prof David Vaughan, a co-author on the study.
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Climate Policy Options and the World Trade Organization

noreply@blogger.com (Economist) — Mon, 07 Sep 2009 08:25:00 +0000

A good summary article of the WTO - environmental position.

It is going to get very messy in my opinion especially with the US proposal to tax carbon imports. The authors of this article are correct to point out the almost certain challenges that will arise.

Climate Policy Options and the World Trade Organization [PDF]

Gary Clyde Hufbauer and Jisun Kim
Peterson Institute for International Economics, Washington

http://www.economics-ejournal.org/economics/journalarticles/2009-29

Abstract

This paper examines whether the climate policy options policymakers are contemplating are compatible with core principles of the world trading system set forth in the General Agreement on Tariffs and Trade (GATT), the World Trade Organization (WTO), and Appellate Body decisions. The authors argue that border measures—both import restrictive measures and export subsidies—contemplated in US climate bills and the climate policies of other countries stand a fair chance of being challenged in the WTO. Given the prospect of foreseeable conflicts with WTO rules, the authors suggest that key WTO members should attempt to negotiate a new code that delineates a large “green space” for measures that are designed to limit GHG emissions both within the member country and globally. By “green space,” the authors mean policy space for climate measures that are imposed in a manner broadly consistent with core WTO principles even if a technical violation of WTO law could occur. To encourage WTO negotiating efforts along these lines, the authors recommend a time-limited “peace clause” to be adopted into climate legislation of major emitting countries. The peace clause would suspend the application of border measures or other extraterritorial controls for a defined period while WTO negotiations are under way.

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